The most well-known electric vehicle (EV) stock in the world has to be Tesla Inc. Early investors in Tesla have been a jubilant lot for some time. Recall that Tesla was listed on Nasdaq on June 29, 2010, issuing a mere 13.3 million shares priced at US$17 (RM81) apiece. A year later, Tesla’s stock had fallen to under US$5 (RM24) a share. A decade later and Tesla’s share has gone ballistic. The shares surged from a split-adjusted US$30 (RM142) at the start of 2020 to over US$400 (RM1,898) at its peak last November, and now trades at around US$214 (RM1,016). Tesla’s shares underwent a three-to-one split, which means investors received two additional shares for each share they held prior to the split. That said, there are detractors who think that Tesla’s shares are overpriced, more so with the recent news that its billionaire owner Elon Musk is distracted with running Twitter Inc, having concluded the acquisition plan last week and proposing peace plans for the Russia-Ukraine war. Tesla also trades at a demanding price earnings (PE) ratio of over 66 times. For example, famed short-seller Jim Chanos says Tesla has an over-reliance on its China factory, trades at expensive valuations of more than 10 times its revenue and more than 30 times gross profits. Chanos reckons that Tesla’s valuations could only be justified if the company dominates EVs for years to come. He worries that due to intense competition, Tesla could simply become just another albeit established EV company, among many other EV firms. Nevertheless, based on Bloomberg data, most analysts covering the stock have a “buy” call on Tesla, with the company enjoying a consensus target price of US$282.6 (RM1,340.7). Just as interesting are China EV-related companies. China is leading the way with the EV movement, making and selling the most EVs in the world. Among them include BYD Auto Co Ltd (483.26% up since January 2020) and Nio (159.53%). Yet another interesting company is Contemporary Amperex Technology Co Ltd (CATL), whose share price has shot up by 269.15% from early January 2020. The company has plans to mass produce its “Qilin” battery, which has a range of more than 1,000kms in one charge, by next year and promises fast charging within 10 minutes. No doubt, all this EV euphoria might be influencing some investors and companies to jump on the EV bandwagon. In Malaysia, a number of listed companies have announced their EV plans. For example, Yinson Holdings Bhd has plans to expand its ChargeEV network in Malaysia. Yinson’s ChargeEV network comprises 400-plus chargers. The group intends to raise that figure to more than 4,500 units by 2030. The group plans to deploy its charges in malls, hotels and workplaces. In September 2022, Petroliam Nasional Bhd officially launched a new renewable energy unit called Gentari Sdn Bhd that is targeting to deliver 25,000 EV charging points by 2030, across key markets in Asia Pacific, with an anchored presence in Malaysia and India. Its mid-term target is to have 9,000 charging points by 2026. Utility giant Tenaga Nasional Bhd (TNB) is also ramping up its contributions in the EV space. It has revealed plans to invest around RM90bil annually for the next three years to boost the adoption of EVs to reach 500,000 cars by 2030. This move is expected to contribute RM1.25bil in annual electricity revenue. TNB also aims to capture an estimated RM1.3bil of EV market value by 2030. Auto parts maker, EP Manufacturing Bhd, via a collaboration with US-based EV player Saean Group Inc is set to make its debut to manufacture four-wheel EVs. Both companies agreed to produce 20,000 electric cars per year for Malaysia and South-East Asian markets. Additionally, Sersol Bhd has partnered with Takuni Group Public Company Ltd, Thai energy and EV motorbike specialist to set up a Malaysian entity to handle the manufacturing, marketing and distribution of EV motorbike batteries, EV batteries and charging platforms throughout Malaysia, Indonesia and Thailand. Ni Hsin Group Bhd says it plans to diversify into the EV sector and notes that it has received approvals from the Road Transport Department or JPJ for the two EV bike models. It plans to assemble and sell these EVs in the local market. Meanwhile, fund managers opine that investors can only make the right investments in EV-related stocks when they have a thorough understanding of the value-chain of the industry. Tradeview Capital Sdn Bhd chief executive officer Ng Zhu Hann tells StarBizWeek, “For example, battery manufacturing is one of the most important segments in the EV industry. A successful EV is highly reliant on the performance, reliability and durability of the battery. “This is the reason why the share price performance of EV battery makers such as CATL has been spectacular for the past five years, with a return of more than 628% since 2018.” Ng adds that the danger of chasing trends in the stock market is that investors tend to ignore the fundamental principles of a company’s profitability, focusing too much on future expectations. “During its early years, Tesla burnt through a lot of cash before being able to carve out its market share. There was sufficient funding to keep the company going, even during the most challenging times. However, not many companies have the luxury to bleed cash continuously like Tesla did. “If investors are truly passionate about the EV space, it would be wise to consider automotive companies with established track records of innovation and execution such as Porsche, BMW, Volkswagen, BYD, and Geely. For companies along the value chain, investors can look for names like Bosch (sensor manufacturer) and Panasonic (battery maker),” he says. Fortress Capital Asset Management Sdn Bhd chief executive officer Thomas Yong states that companies along the entire value chain of the EV sector are expected to see a surge in demand going forward. “We prefer the mid-upstream segments such as the materials, battery and component makers where manufacturers are most able to pass on any cost pressure to downstream original equipment manufacturing companies due to tight supply conditions,” he says. Nevertheless, Yong notes that many EV startups have yet to be profitable and will likely face stiff competition when established automakers increase their EV production volumes. “We are still in the early phase of the EV industry development. There are many new startups in the industry and with established automakers entering the sector, consumers will be spoilt for choice. “Hence, eventual stiffer competition will be unavoidable. Investors picking startups will also need to be mindful of the risk of startup failures,” he says.